7 steps to improve credit union vendor management
TRANSCRIPT
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Presented by: Ben Mrva Executive Vice President
June 24, 2016 1 6/22/2016
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That’s Going to Leave a Mark: The most expensive vendor
management mistakes and 7 ways to make your Credit Union better
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Why you should care….
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Who will be here in 5 years?
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Your Vendors are Winning
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Net Revenue ($M) 2011 2012 2013 2014 2015 5 YR
Vend A $9,188 $10,421 $11,778 $12,702 $13,880 51% Vend B $6,717 $7,391 $8,312 $9,441 $9,667 44% Vend C $4,289 $4,436 $4,814 $5,066 $5,254 22% Vend D $967 $1,027 $1,129 $1,173 $1,256 30% Vend D $1,622 $1,863 $2,108 $2,577 $3,160 95%
Net Income ($M) 2011 2012 2013 2014 2015 5 YR
Vend A $3,528 $4,203 $4,980 $5,721 $6,438 82% Vend B $1,906 $2,759 $3,116 $3,617 $3,808 100% Vend C $472 $611 $648 $754 $712 51% Vend D $137 $155 $177 $187 $211 54% Vend E $630 $742 $860 $1,007 $1,178 87%
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What we are seeing and the steps you can take
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1. Manage Term and Notification Dates
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1. Manage Term and Notification Dates
• Utilize contract management tools – internal or 3rd party • Active, not passive tools
• Limit auto-renew to 12 months • Notify vendors of non-renewal
Call to Action
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1. Manage Term and Notification Dates
• Utilize contract management tools – internal or 3rd party • Limit auto-renew to 12 months • Notify vendors
• More flexibility • Avoids surprises • Keeps vendors in check
Desired Outcome
Call to Action
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2. Bid out every contract
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2. Bid out every contract
• Bid out all vendor contracts – especially critical vendors • Start the process 18 to 24 months from termination date • Include alternate vendors – do your research • Solicit multi-year options
Call to Action
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2. Bid out every contract
• Bid out all vendor contracts – especially critical vendors • Start the process 18 to 24 months from termination date • Include alternate vendors – do your research • Solicit multi-year options
• Drives towards market pricing • Improves awareness of new technologies and services • Prevents performance drag from bad contracts
Desired Outcome
Call to Action
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3. Consider other vendors
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3. Consider other vendors
• Be open to alternate vendor proposals • Beware of the partner premium • Communicate to incumbent your willingness to move
Call to Action
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3. Consider other vendors
• Be open to alternate vendor proposals • Beware of the partner premium • Communicate to incumbent your willingness to move
• Drives towards market pricing • Improves awareness of new technologies and services • Avoids the partnership complacency • Keeps incumbents in check
Desired Outcome
Call to Action
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4. Negotiate de-conversion costs
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4. Negotiate de-conversion costs
• Address costs up front during contract negotiations • Negotiate and cap fees • Consider your long term strategies
Call to Action
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4. Negotiate de-conversion costs
• Address costs up front during contract negotiations • Negotiate and cap fees • Consider your long term strategies
• Eliminate surprises • Minimize exposure • Allows for flexibility
Desired Outcome
Call to Action
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5. Factor in your growth
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5. Factor in your growth
• Take the time to plan • Design contract pricing to account for scale
Call to Action
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5. Factor in your growth
• Take the time to plan • Design contract pricing to account for scale
• Take advantage of economies of scale • Reduce risk of poor performance
Desired Outcome
Call to Action
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6. Manage the “business” relationship
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6. Manage the “business” relationship
• Set appropriate policies • Eliminate emotion • Be open to options • Consider the alternatives
Call to Action
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6. Manage the “business” relationship
• Set appropriate policies • Eliminate emotion • Be open to options • Consider the alternatives
• Avoid the “partner” premium • Stay ahead of market technology and pricing
Desired Outcome
Call to Action
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7. Validate Vendor Pricing
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7. Validate Vendor Pricing
• Dictate the pricing model • Beware the unsolicited proposal • Research your options • Find a resource to help
Call to Action
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7. Validate Vendor Pricing
• Enable “apples to apples” comparisons • Avoid surprises • Identify new incentives • Insure market pricing • Level the playing field
• Dictate the pricing model • Beware the unsolicited proposal • Research your options • Find a resource to help
Desired Outcome
Call to Action
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1. Manage term and notification dates 2. Bid out every contract 3. Consider other vendors 4. Negotiate de-conversion costs 5. Factor in your growth 6. Manage the “business” relationship 7. Validate vendor pricing
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srmcorp.com | 800.748.2577 | Confidential and proprietary. Not to be copied or distributed without approval from Strategic Resource Management, Inc.
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Questions?
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srmcorp.com | 800.748.2577 | Confidential and proprietary. Not to be copied or distributed without approval from Strategic Resource Management, Inc.
srmcorp.com | 800.748.2577 | Confidential and proprietary. Not to be copied or distributed without approval from Strategic Resource Management, Inc.
Thank You!
30 6/22/2016
Ben Mrva Executive Vice President